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89) The Corner Grocer has a 7-year, 6.5 percent semiannual coupon bond outstanding with a
$1,000 par value. The bond has a yield to maturity of 5.5 percent. Which one of the following
statements is correct if the market yield suddenly increases to 7.25 percent?
A) The bond price will decrease by 9.27 percent.
B) The bond price will increase by 7.04 percent.
C) The bond price will decrease by 8.64 percent.
D) The bond price will increase by 7.16 percent.
E) The bond price will increase by 3.86 percent.
90) Do-Well bonds have a face value of $1,000 and are currently quoted at 867.25. The bonds
have coupon rate of 6.5 percent. What is the current yield on these bonds?
A) 7.45 percent
B) 7.67 percent
C) 7.49 percent
D) 8.03 percent
E) 8.47 percent
91) The $1,000 par value bonds of Uptown Tours have a coupon rate of 6.5 and a current price
quote of 101.23. What is the current yield?
A) 6.60 percent
B) 6.37 percent
C) 6.42 percent
D) 6.49 percent
E) 6.58 percent
92) A $10,000 face value Treasury bond is quoted at a price of 101.6533 with a current yield of
4.87 percent. What is the coupon rate?
A) 5.20 percent
B) 4.48 percent
C) 5.41 percent
D) 4.95 percent
E) 4.27 percent
93) A corporate bond is quoted at a price of 98.96 and has a coupon rate of 4.8 percent, paid
semiannually. What is the current yield?
A) 4.24 percent
B) 4.85 percent
C) 5.36 percent
D) 5.62 percent
E) 4.66 percent
94) The yield to maturity on a bond is the interest rate you earn on your investment if interest
rates do not change. If you actually sell the bond before it matures, your realized return is known
as the holding period yield. Suppose that today you buy a coupon bond with 9 percent annual
interest for $1,000. The bond has 12 years to maturity. Three years from now, the yield to
maturity has declined to 7 percent and you decide to sell. What is your holding period yield?
A) 8.84 percent
B) 9.49 percent
C) 10.96 percent
D) 13.01 percent
E) 12.83 percent
95) A 3.25 percent Treasury bond is quoted at a price of 99.04. The bond pays interest
semiannually. What is the current yield?
A) 2.94 percent
B) 2.99 percent
C) 3.28 percent
D) 3.33 percent
E) 3.23 percent
96) The semiannual, 8-year bonds of Alto Music are selling at par and have an effective annual
yield of 8.6285 percent. What is the amount of each interest payment if the face value of the
bonds is $1,000?
A) $41.50
B) $42.25
C) $43.15
D) $85.00
E) $86.29
97) A $1,000 face value bond has a coupon rate of 7 percent, a market price of $989.40, and 10
years left to maturity. Interest is paid semiannually. If the inflation rate is 2.2 percent, what is the
yield to maturity when expressed in real terms?
A) 5.03 percent
B) 4.68 percent
C) 4.92 percent
D) 4.84 percent
E) 5.68 percent
98) Kaiser Industries has bonds on the market making annual payments, with 14 years to
maturity, a par value of $1,000, and a current price of $1,108.60. At this price, the bonds yield
7.5 percent. What is the coupon rate?
A) 8.93 percent
B) 8.46 percent
C) 9.01 percent
D) 9.32 percent
E) 8.78 percent
99) Dexter Mills issued 20-year bonds one year ago at a coupon rate of 10.2 percent. The bonds
make semiannual payments and have a par value of $1,000. If the YTM is 8.2 percent, what is
the current bond price?
A) $985.55
B) $991.90
C) $1,142.16
D) $1,190.93
E) $1,098.00
100) A bond has a coupon rate of 8 percent, 7 years to maturity, semiannual interest payments,
and a YTM of 7 percent. If interest rates suddenly rise by 1.5 percent, what will be the
percentage change in the bond price?
A) −8.16 percent
B) −8.87 percent
C) −7.56 percent
D) −7.64 percent
E) −8.67 percent
101) Sunset Sales has 6.8 percent coupon bonds on the market with 11 years left to maturity. The
bonds make semiannual payments and currently sell for 98.6 percent of par. What is the effective
annual yield?
A) 7.24 percent
B) 7.19 percent
C) 7.33 percent
D) 7.11 percent
E) 7.07 percent
102) Bonner Metals wants to issue new 20-year bonds. The company currently has 8.5 percent
bonds on the market that sell for $994, make semiannual payments, and mature in 7 years. What
should the coupon rate be on the new bonds if the firm wants to sell them at par?
A) 8.75 percent
B) 9.23 percent
C) 8.41 percent
D) 8.62 percent
E) 8.87 percent
103) Bare Trees United issued 20-year bonds 3 years ago at a coupon rate of 8.5 percent. The
bonds make semiannual payments. If these bonds currently sell for 91.4 percent of par value,
what is the YTM?
A) 8.98 percent
B) 9.53 percent
C) 9.13 percent
D) 9.27 percent
E) 8.42 percent
